Phoenix shopping centers thriving post-pandemic

Desert Sky Mall is over 96% leased


The death of the Phoenix retail market has been greatly exaggerated.

That’s according to Valley retail and shopping center experts who say that brick-and-mortar shopping centers are definitely not on their way out, despite having in-person experiences temporarily limited by the COVID-19 pandemic.

Desert Sky Mall, the Southwest Phoenix shopping center on 7611 West Thomas Road owned by Macerich, was 96.5% leased with few vacancies as of Dec. 31, according to the company’s most recent SEC filings.

Macerich has owned the neighborhood shopping center since 2002. According to Laura Crossman, a spokesperson for the mall, occupancy and traffic are in line with pre-pandemic levels.

“For Desert Sky Mall, our traffic has really come back,” said Crossman. “In fact, some months this year we’ve actually seen higher traffic than 2019 – meaning there is pent up demand to go back to shopping and being social with our friends and family.”

Macerich is a big presence in the Phoenix retail scene, as it also boasts ownership of Arrowhead Towne Center in Glendale, which was 95.8% leased as of this past December, among others. The only Valley property Macerich is involved with that has more than 10% vacancy is Biltmore Fashion Park in central Phoenix area, which was 86.6% leased at the time of filing.

Crossman said this rebound in sales is only expected to continue as Phoenix, alongside the rest of the country, pulls itself out of the pandemic, despite the dominance of online shopping that only deepened amid statewide stay-at-home orders.

“Brick-and-mortar and online shopping have been successfully co-existing for some time,” she said. “Shoppers will always want the opportunity to touch and feel the merchandise, and hand-select items they are purchasing. And the comfort of leaving the mall with their item on the day they want it, and not waiting for it to be delivered, is another perk of visiting your local shopping center.”

Macerich, which recently sold the Paradise Valley Mall to RED Development for a major redevelopment project, said it has no plans to redevelop or expand Desert Sky Mall. MetroCenter, another Phoenix staple, closed down last year as well.

But those neighborhood losses seem to be an anomaly.

Research from Colliers International in Arizona supports Desert Sky’s post-pandemic rebound and shows Phoenix is recovering nicely from the economic fallout. The first quarter of 2021 brought positive net absorption to the Phoenix retail market, pushing vacancy down and allowing rental rates to grow, according to a January report released by the commercial real estate firm.

Retail jobs, some of the hardest hit in the early days of the pandemic, have also made great strides in a return to pre-pandemic normalcy.

“The city lost significant jobs during the spring of 2020, as the pandemic unfolded, but many have been recovered,” wrote Phillip Hernandez, a Colliers researcher, in a January blog post. “The retail trade supersector lost 29,000 jobs in April of last year and, as of March 2021, approximately 99.6% of the lost jobs had been recovered.”

The year’s first quarter also finished with just 7.7% of retail space vacant, which is an increase of 40 basis points over vacancy posted March 2020. That was especially true in the growing West Valley, which delivered more than 200,000 square feet of new product in 2020 and had the largest decline of vacancy year-over-year of 70 basis points since 2019.

Hernandez said the Valley’s booming population is largely responsible for its retail success with businesses moving their headquarters to Phoenix from out-of-state, along with creative moves like the Paradise Valley Mall adaptive reuse project.

“The retail real estate market was arguably hit hard by the COVID-19 pandemic, but metro Phoenix endured the challenges more successfully than most markets,” Hernandez said. “Despite the setbacks of pandemic closures, the Greater Phoenix retail market remains optimistic.”